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So… where is the money going to go?

Rob Day: March 31, 2005, 8:03 PM
"[Venture] funds raised three years ago still have a significant amount set aside for new investments. According to the survey, 15% of 2001 funds remain set aside for new investments compared to 50% of 2002 funds, 60% of 2003 funds and 85% of 2004 funds." Hence the $53.6B overhang.

This from an article titled, "Venture Capital Fund Raising Doubles in 2004." And echoed in this Economist article.

Cleantech, according to many, is in the fortunate position of remaining underinvested even in the midst of such well-capitalized "optimism," as a quote in the article terms it.

The real renewable energy opportunity: Transmission?

Rob Day: March 31, 2005, 12:24 PM
Received an interesting UtiliPoint Issues Alert email today from Ken Silverstein (unfortunately, it's not posted yet on their website, but I will link to it when it's available).

Silverstein's message is that utilities are increasingly backing renewable energy, driven in no small part by Renewable Portfolio Standards (RPS) which are now in effect in 19 states. While the aggregate non-hydro renewable energy supply remains less than 2% of the US's 770,000MW overall generation capacity, he reports that some experts think that share might triple within four years.

One thing to note, however, is that what this really comes down to is wind and geothermal power. While solar power is coming...

Millennium Ecosystem Assessment

Rob Day: March 30, 2005, 2:00 PM
Here is a sobering story on the state of the world's natural resources.

Whether one is a pessimist or an optimist about the future of global resources, it's worth noting that every time a story like this comes out, it simply bolsters the argument that clean technologies will be increasingly advantaged over the long run. The trick is to find such technologies that are also money-makers over the short term...

Demand response/ load management is a $1.3B industry in the U.S.

Rob Day: March 29, 2005, 9:53 PM
ACEEE today released a useful primer [note: link opens a large pdf file] on the practice and current status of demand response/ demand side management/ load management in the U.S.

In light of the data released today by Nth Power that showed significant and growing interest by VCs in the generation side of energy tech, it's interesting to note that centralized utility-led efforts to reduce demand for electricity in the first place remains a vibrant market.

Such programs apparently saved 22,904 MW of peak-load power in 2003. According to my amateur calculations, that's the equivalent of obviating the need for:
  • Approx. 100 large coal fired plants; or
  • 270 GE Frame 7 natural-gas-fired...

Clean energy investments continue to be strong

Rob Day: March 29, 2005, 9:34 PM
Nth Power today released the results of their annual survey of "energy tech" venture investing.

The bottom line is the headline -- such investments totalled $520m in the US in 2004, up slightly from 2003's $509m.

But some of the more interesting bits are in the details.
  • The firm's data tracked 69 applicable transactions, for an average deal size of $7.5m. That average is up a bit from 2003, but there were more deals done in that year (84).
  • 40% of all funding went to companies in California. What does this mean? Are 40% of the investable energy tech startups located in California? An argument could be made that this shows there are as yet untapped investment opportunities in...

GE Commercial Finance provides capital for residential solar systems

Rob Day: March 28, 2005, 8:48 AM
While venture capital is increasingly turning to cleantech, a major gap in project financing still exists.

For many clean technologies, the reality on the ground is that even the best solution can be hard for customers to pay for with cash -- the systems being sold are large and expensive. What consumer is going to pay $30k in cash to put a solar system on their roof, whether or not it makes sense financially? What budget-strapped facilities manager for a large company is going to install a superior HVAC system, if it means he goes over his budget this year, even if it saves money in the long run?

These are on the end user side, but other project financing needs are seen on the...

Is carry on the rise?

Rob Day: March 27, 2005, 9:22 PM
According to this column from PrivateEquityOnline.com, some top VC funds are seeking, and getting, higher carry -- to 25% and even 30% ("carry" or "carried interest" is the share of a fund's profits that the fund's managers receive).

It is especially interesting in light of the news I noted earlier that there is a $53.6B capital overhang in the industry.

Clearly there is no shortage of capital seeking action in the venture sector right now -- why else would investors be willing to pay such high carry to get into top funds. And perhaps there is more capital than can easily be spent. An interesting problem. It suggests deal valuations will continue to be driven up, which as this Red...